EU Gives Guarded Welcome to U.S. Guidance on EV Tax Credits

BRUSSELS (Reuters) – The European Commission gave a guarded welcome on Thursday to guidance by america meaning that EU firms could partially profit from the U.S. Inflation Reduction Act, but said further improvements were required.

The $430 billion green subsidy law, which grants tax credits for getting U.S.-produced electric vehicles (EVs) and other green products, has triggered fears it could make america a world leader within the EV market on the expense of European countries.

The Commission, which coordinates trade policy for the 27-nation European Union, said the U.S. guidance, published on Thursday, showed EU producers may gain advantage from tax credits for sales to industrial operators, but their vehicles wouldn’t be eligible for such credits when sold to non-public consumers.

The scheme will start on January 1.

The Commission said the Qualified Industrial Clean Vehicle Credit can be available to EU firms without requiring changes to established or foreseen business models of EU producers.

A industrial clean vehicle, the guidance says, “is made by a certified manufacturer”.

Nevertheless, for the Recent Clean Vehicle Credit for consumers, the vehicle will need to have final assembly in North America.

The Commission said the scheme remained a priority, with provisions that discriminated against clean vehicles and inputs made within the European Union, and it violated international law. By weakening competition, it also risked raising prices.

The Commission said a joint task force arrange to debate the subject would proceed to hunt solutions to EU concerns, reminiscent of by treating the European Union in the identical way as all U.S. free-trade-agreement partners.

“We welcome the U.S. announcement today that more time might be taken to work on the outstanding guidelines, allowing it to handle these issues satisfactorily,” it said.

(Reporting by Philip Blenkinsop; Editing by Bradley Perrett)

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